Wizard hopes for bank offer

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One of the country's big four banks is believed to be considering a bid for Mark Bouris' Wizard Home Loans Group parent Australian Financial Investments Group in a move that could trump an offer from financial services giant GE Capital.

While none of the majors would comment yesterday, speculation has centred on ANZ.

A deal that valued the company at more than $500 million between GE's local finance arm, GE Money, and AFIG was expected to have been signed off last week.

But the transaction has been delayed as AFIG's four major shareholders, Publishing and Broadcasting Ltd, ABN Amro, Deutsche Bank and Mr Bouris' State Capital Corp, consider the prospect of another offer.

The shareholders were weighing the possibility of a higher price against the certainty of the GE bid, an investment banking source said yesterday.

ANZ chief executive John McFarlane has made no secret of his belief that the bank is underweight in mortgages and other retail products in the local market.

ANZ has total housing lending, including securitisation, of $67.6 billion, compared with $85 billion for Westpac and National Australia Bank and $113 billion for Commonwealth Bank, according to the latest statistics from the Australian Prudential Regulation Authority.

Wizard would contribute a loan book of more than $10 billion and AFIG's total loan book is close to $18 billion, including its securitisation business, Australian Mortgage Securities.

One analyst suggested NAB could use the purchase of Wizard to offset its falling market share following the bank's foreign exchange trading scandal and subsequent board and management upheaval.

However, given it is still ironing out its problems it may not be willing to take on an acquisition.

Commonwealth Bank is already a dominant player in the local mortgage market, while Westpac has been actively reducing its exposure to home lending by limiting the number of loans it sells through mortgage brokers and avoiding exposure to low-document loans.

It is believed that GE has agreed to pay more than $400 million for AFIG, which is also carrying $100 million of debt.

The company is expected to earn $30-$35 million this year based on PBL's latest half-yearly accounts, which show that its 25 per cent AFIG stake contributed $4 million to earnings.